Tax on Absentee Landlords Is Criticized as Hard on Poor

By MICHAEL COOPER

Published: August 6, 2003

A new city property tax surcharge on absentee landlords who rent out one- to three-family homes will hit low-income and minority neighborhoods the hardest, according to a report issued yesterday by the city's Independent Budget Office.

The new absentee landlord tax, which the City Council sought for more than a year, was included in the budget adopted last month.

City officials said the new tax would make the system fairer. The city keeps property taxes on one- to three-family homes lower than on other kinds of property to promote home ownership. Absentee landlords have been able to take advantage of those low tax rates even though they live elsewhere and use the property solely as investments.

So the city decided to impose a surcharge averaging $570 per building to bring the taxes on homes owned by absentee landlords in line with other rental property.

The Independent Budget Office, a nonpartisan city agency, said analysis of recent census data showed the new surcharge would be felt most in low-income neighborhoods with large numbers of African-American and Latino residents. Since few of the properties in those neighborhoods are covered by rent regulations, the report said, landlords are likely to raise the rent to pay the surcharge.

City officials disputed the report, saying they did not believe the surcharge would affect any areas disproportionately. The officials argued that since rents are now as high as the market will bear, landlords would be unlikely to raise them just to cover the surcharge.

The budget office analysis found that the neighborhoods with the most absentee landlords are East New York, Brooklyn, and Bedford-Stuyvesant, Brooklyn. The study also found that the neighborhoods with the greatest concentration -- that is, those in which absentee landlords owned the highest percentage of all one- to three-family homes -- were Williamsburg, Brooklyn, and Corona, Queens.

City Council Speaker Gifford Miller, an early champion of the surcharge, called the report ''plain wrong'' and said that ''it seems that they have made up their numbers out of thin air.'' He said the surcharge was intended to eliminate ''what is essentially a windfall for commercial absentee landlords.''